How Wall Street Keeps #metoo Claims Out of the Spotlight

By Rob Copeland, Liz Hoffman and Rachel Louise Ensign 

Late last year, a woman at Bank of America Corp.'s hedge-fund-focused, prime-brokerage division complained to human resources about her boss. Other women soon followed suit.

These women alleged that a senior banker and firm managing director, Omeed Malik, made unwanted advances toward female colleagues and engaged in relationships with female subordinates, without the knowledge of Bank of America's top brass, people familiar with the matter say.

After the initial complaint, the bank mobilized a group of internal investigators who began interviewing employees, the people say. With the investigation continuing, Mr. Malik was fired earlier this month, some of the people say.

The bank told staff internally only that he left to pursue other opportunities, though it privately told some clients that more was behind the move, some of the people say.

Bank of America personnel policy states that personal relationships among employees in which one has influence over another can lead to "real or perceived conflicts of interest" and "should be avoided when possible."

This is how such allegations of inappropriate conduct are handled on Wall Street in 2018. Like other large corporations, major financial institutions such as banks and hedge funds mostly act privately to handle with midlevel allegations of misconduct, in many instances allowing the accused employees to leave quietly.

This can have the effect of satisfying neither the alleged victims, many of whom complain that departing executives can continue careers elsewhere with their reputations intact, nor the accused, who say the rapid-fire process doesn't allow for all the facts to come to light.

While entertainment, media and technology firms are currently generating major headlines about inappropriate behavior, banks had their moment in this spotlight around 20 years ago. At that time, the infamous "boom boom room" lawsuit at Smith Barney contained shocking allegations about the treatment of female employees in the basement of a branch. The brokerage firm settled some complaints, paying $150 million, including fines and settlements, and pledged to revamp its culture.

In the wake of that scandal, firms across Wall Street say they have built procedures to identify potentially inappropriate conduct that, whether they work or not, almost always ensure the incident is handled with a minimum of public attention.

Some broader factors also have kept allegations at major financial firms out of the limelight.

Mandatory arbitration agreements, which require employees to waive their rights to bring claims in court as condition of employment, are now ubiquitous across financial-services firms. Such waivers also prevent public class-action suits that roll together claims from various accusers. The arbitration process also commonly involves the use of nondisclosure agreements in individual settlements, effectively muzzling alleged victims of harassment and other discrimination from speaking out.

Details on terminations sometimes emerge later through regulatory filings on brokers who leave their jobs.

Goldman Sachs Group Inc. quietly fired a trader, who was a vice president of the firm, late last year after he boasted at a firm event that he could unhook a bra over a woman's shirt and attempted to demonstrate on a female colleague, according to people familiar with the incident. After the woman reported the incident to human resources, the trader was fired, the people say.

That incident, not previously reported, occurred soon after the abrupt departure of a top Morgan Stanley research analyst in November after a female colleague claimed he touched her inappropriately at a company event where alcohol was served, according to people familiar with the matter. The Morgan Stanley executive, Nigel Coe, a managing director with responsibilities to research General Electric Co. and other industrial companies, wasn't fired for cause, but was encouraged to resign, one of the people said.

Mr. Coe said in a brief interview that his departure was "by mutual consent," and declined to comment on its circumstances.

"We're getting quadruple the calls ever since Harvey Weinstein," said New York discrimination attorney Derek Smith, referring to the movie mogul accused of inappropriate conduct. Mr. Weinstein has denied allegations of nonconsensual sex. "Maybe gone are the days where brokers hold up scorecards for women who walk by...but sexual harassment is still prevalent in the financial industry," added Mr. Smith.

Inappropriate behavior at financial firms also may be dissuaded by the post-financial-crisis reality that emails and chats of bank employees at all levels are now routinely monitored by an army of compliance workers.

Wells Fargo in July centralized harassment investigative work "to ensure cases are reviewed quickly and with the utmost care," a spokeswoman said in a statement. She added that the bank believes "it is important to assess the root cause to help determine if there are underlying issues that require additional attention."

--Lisa Beilfuss and Emily Glazer contributed to this article.

(END) Dow Jones Newswires

January 19, 2018 19:31 ET (00:31 GMT)

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